This week's Federal Budget contained a number of integrity (aka revenue raising) measures which will impact small businesses. There was also at least one announcement which will be welcomed by small business owners. So what do small business owners need to know about last night's Federal Budget?

  • $20,000 instant asset write off for small business extended to 30 June 2019 In our article Less than 5 months left to use the $20,000 instant asset write-off we discuss the $20,000 instant asset write-off for small business. This measure was expected to end on 30 June 2018. This measure was expected to end on 30 June 2018. Last night the Treasurer announced that the $20,000 instant asset write-off for small business would be extended by another year to 30 June 2019. From 1 July 2019 the instant asset write off amount will revert back to $1,000. See Less than 5 months left to use the $20,000 instant asset write-off for further information on how to qualify for the instant asset write-off.
  • Payments to employees and contractors – no deduction without PAYG withholding 1 July 2019 businesses will no longer be able to claim deductions for payments made to employees (salary and wages) if they do not comply with their PAYG withholding obligations on these payments. Deductions will also be denied to businesses for payments to contractors who do not provide an ABN and the business does not comply with their PAYG withholding obligations.
  • Cash payment limit of $10,000 for goods and services From 1 July 2019 businesses will no longer be able to accept cash payments of more than $10,000 for goods and services. Instead, these payments (of more than $10,000) will need to be paid electronically or by cheque.
  • Directors to be personally liable for unpaid GST Currently the Director Penalty Regime makes directors personally liable for certain company debts including PAYG withholding and the superannuation guarantee charge (SGC). The Government will extend the Director Penalty Regime to make directors personally liable for outstanding GST owed by their company to the ATO. The Director Penalty Regime will also be extended for wines equalisation tax and luxury car tax.
  • ATO to receive $133.7m for collection of tax and superannuation debts The Government will provide $133.7 million to the ATO to continue their strategies to increase debt collections and improve the timeliness of debt collections. The measure is intended to "ensure the ATO is able to continue to target those taxpayers gaining an unfair financial advantage over those who pay their fair share of tax and superannuation." The ATO will also receive an additional $130.8million to increase compliance activities targeted at individual taxpayers and their tax agents.

Other measures

There are a range of other measures dealt with in the 2018-2019 Federal Budget which may be relevant to small businesses including:

  • Proposals to tighten the application of Division 7A to an unpaid present entitlement (UPE) of a private company from 1 July 2019
  • Delaying the start of previously announced Division 7A measures (announced in the 2016-2017 Budget)
  • Restrictions on deductions for expenses associated with holding vacant land
  • Denying access to the small business CGT concessions to partners who alienate rights to future partnership income
  • Changes to the R&D tax incentive

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.